Regan forced to seek Corvus approval

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CORVUS CAPITAL, the cash shell company controlled by Andrew Regan, the controversial financier, is being forced to seek shareholder approval for its investment strategy after a string of deals that contradicted the company's prospectus last year.

The company issued a clarification of its strategy yesterday and set a date for an extraordinary meeting after talks with the London Stock Exchange.

Corvus, in its present incarnation, was floated on AIM in March with no operating businesses, but a mandate to "invest in companies with an emphasis on income generation that have a proven or anticipated stable and cash-generating business". Instead, it has set up and taken minority stakes in four other cash shells.

The company wrote to shareholders yesterday saying that "these recent transactions constitute a variation of its stated investment strategy". It added that it plans to seek approval "for such a variation".

A spokesman for the LSE, which regulates AIM, said: "The rule book states that if there is a deviation from a stated strategy, the company must call an EGM to re-seek shareholder approval, and we brought this to the company's attention."

Its actions come in the week that AIM published proposals to tighten up the rules on cash shells. It said that such companies should raise at least pounds 3m, a sum which is likely to require an institutional investor who might be better able than private individuals to scrutinise the company's management. There will also be a requirement for a cash shell to make a substantial acquisition within a year or face having its shares delisted.

Mr Regan's appointment as chief executive of Corvus in September marked his formal return to the City after being cleared of impropriety during his failed bid for the Co-op in 1997. In April, Corvus had acquired his Dubai-based investment vehicle Everdene, and yesterday it wrote off all pounds 11.4m of goodwill associated with Everdene.

Simon Raggett, of Strand Partners, Corvus's nominated adviser, said the group's statement was aimed at informing the market of the investment strategy which has evolved. This is to invest in cash shells that would quickly acquire businesses capable of generating cash.